

The spot month gas contract ended a 4 day slide on Friday, rising nearly 9 cents as conflict in the Middle East sparked supply fears. Weather models showing a hotter pattern this week was also supportive. Despite Friday’s gain, nat gas posted an impressive selloff last week with the spot month contract down about 20 cents from the previous week. Weak seasonal demand fueled a 7th straight triple digit injection, leaving stocks at a surplus of 140 BCF versus the 5 yr avg. Reduced feedgas demand has also been a negative factor.

After trending higher late last week, total demand fell Friday by 1.5 BCF/day and continued to trend lower over the weekend. A decline in power burn along with lower feedgas demand contributed to the decline. Demand is estimated this morning at 97.8 BCF/day with estimates showing total consumption rising to 101.6 BCF/day over the 6-10 day period while jumping to an average of 104.5 BCF/day during the 8-14 day period.
Weather forecasts indicate heat is starting to move into the eastern US with much warmer temperatures developing over the next 2 weeks. According to the Weather Desk, the next 15 days are forecast to total 170.3 CDDs, which is well above normal and would rank 2nd hottest for the period. This marks an increase of 6.5 CDDs since Friday, of which 5.7 of those CDDs will occur during the 6-10 day period. As the East heats up, temps across the West will turn much cooler.

Prices are trading higher this morning as forecasts show much warmer temps on the horizon for the eastern US. Exports are also starting to recover. Production levels at 105.5 BCF/day are considered a negative factor and should help keep the upside limited.
Technical Analysis

The July 25 natural gas contract sold off in last week’s early trade bottoming out Tuesday at a 3.453 low which closed an open gap on the 60-minute chart at the same level.
The July contract rallied higher in late trade Friday closing at 3.581, just under 10 day moving average resistance.
For the week, the July contract was down .203 or 5.4%.
The July 25 natural gas contract sold off in last week’s early trade bottoming out Tuesday at a 3.453 low which closed an open gap on the 60-minute chart at the same level.
The July contract rallied higher in late trade Friday closing at 3.581, just under 10 day moving average resistance.
For the week, the July contract was down .203 or 5.4%.
Moving Average Alignment – Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index - 55.08






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